PSCI 3325 Lecture Notes - Lecture 1: Natural Monopoly, Externality, Market Power
18 Oct 2016
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Document Summary
Provide the fundamentals: alleviate market failure. No one seller or buyer that they can manipulate the price that they pay or sell. Can be a political issue, monopoly of railroads and eventual regulation of it. Natural monopoly - the cost per unit to produce something decline with the quantity produced until it is enough. One producer is the best to keep costs down. Private monopolies are subject to government regulation. Monopolies acquired to legitimate and illegitimate ways. One deposit of mineral and you discover it - lucky monopoly. Do not want to put people down for being good and want to keep competition, do not want to make money from uncompetitive ways. Courts are involved today more in mergers, but concern of monopolies or too much market power. Not excludable, cannot keep someone from using it. Non-rival, your use of it doesn"t affect another person"s ability to. Natural resources but over consumed, no consideration for other people"s use.
